China's Lenovo, Fujitsu in talks over strategic tie-up in PC business

TOKYO - China's Lenovo Group Ltd. and Fujitsu Ltd. are in talks to form a strategic partnership in the personal computer business, as the Japanese electronics maker aims to stay competitive in a shrinking market, the two companies said Thursday.

Lenovo -- the world's biggest PC maker -- and major Japanese PC manufacturer Fujitsu said they were considering joining forces in the research and development, design and manufacturing of PCs for global markets.

The two companies added they were also in talks with the Development Bank of Japan for financial and other support.

In Japan, Lenovo has a joint venture with NEC Corp. a dominant player in the domestic PC market.

PC makers are facing tough times amid intense competition with companies selling smartphone and tablet devices. Chinese and other foreign players have also been making inroads into the Japanese market.

The move comes after the breakdown in talks about forming a trilateral merger of PC operations of Fujitsu, Toshiba Corp., which was stung by an accounting scandal, and Vaio Corp., a spinoff from Sony Corp.

source: www.abs-cbnnews.com

China’s Lenovo inches closer to a global tech title

HONG KONG — Lenovo Group Ltd is on track to overtake Hewlett-Packard Co as the world’s biggest PC maker by sales as soon as this year, making it the first Chinese company to grab the top spot globally in a technology sector.

The ThinkPad maker’s rise highlights the advance of China’s technology firms on the world stage in recent years thanks to a combination of aggressive pricing, overseas acquisitions and their taking advantage of a fast-growing home market.

Analysts, however, also warn that Lenovo’s rapid gains in market share have come at the expense of profit margins, while the company faces slowing growth in the market for personal computers and tough rivals in the tablet PC space.

“It’s just a matter of time before Lenovo becomes No. 1 and it won’t be surprising at all if it happens later this year,” said Frederick Wong, executive director at Avant Capital Management (Hong Kong) Ltd, which owns shares in Lenovo.

He added, however, that competition in the tablet sector and a weak PC market outlook could put pressure on Lenovo.

Lenovo, which became the world’s No. 2 PC vendor in the third quarter of 2011, had a 14.9 percent global market share in the April-June quarter this year, a mere 0.6 percentage point away from HP’s 15.5 percent, according to research firm IDC’s latest data. Figures from industry tracker Gartner show an even narrower gap, with Lenovo just 0.2 percentage point from HP.

In another technology sector, China’s Huawei Technologies Co Ltd, the world’s No.2 maker of telecom equipment, had been expected to surpass Sweden’s Ericsson in 2011 sales. But slow telecom spending, stiff competition in the handset market and difficulties in tapping the massive U.S. market held it back.

Switching lanes

Lenovo’s rise has been helped by its purchase of Germany’s Medion and a joint venture with Japan’s NEC Corp last year, as well as its acquisition of IBM Corp’s PC business in 2005.

Investors have rewarded Lenovo for its market share gains, sending its stock up by around 16 percent this year and outpacing rivals HP, third-ranked Dell Inc and No. 4 Acer Inc, whose stocks have dropped over the same period.

Lenovo currently trades at a multiple of 12.5 times forward earnings, the second-highest among the top-five PC makers and well above the 4.6 times multiple for HP, Thomson Reuters Starmine data showed.

But profit margins have suffered. Lenovo had a 1.4 percent operating margin in the latest quarter, lower than HP’s 7.4 percent and Dell’s 6.2 percent, the data showed.

“HP, Dell and Acer have switched lanes in the PC race and passed the baton to Lenovo in terms of focusing on sales rather than margins,” said Dickie Chang, an analyst at IDC in Hong Kong.

Another risk is slowing growth in the PC market as the global economy, including Lenovo’s home turf and stronghold China, eases.

China accounts for about 42 percent of Lenovo’s total revenue, with the bulk of that coming from PC sales.

Global PC shipment growth was largely flat in the second quarter, marking the seventh straight quarter of low 0 to 5 percent growth for the industry.

“We remain positive on Lenovo’s market share expansion, but the absolute growth is nevertheless being negatively impacted by a slower market,” Jefferies said in a report. Jefferies has an “underperform” rating on Lenovo with a price target of HK$5.70.

Overall PC demand could pick up this year with the launch of Windows 8, though the catch is that competition in the sector for tablet PCs — not Lenovo’s strongest area — will heat up because the operating system is designed to run on laptops and tablets.

Mizuho analyst Charles Park forecasts the PC market will grow by just 3 percent this year.

Lenovo’s tablets, its LePads, will also face competition from new products, including the next versions of Amazon.com Inc’s Kindle Fire and Apple Inc’s iPad, as well as Google Inc’s Nexus 7 and Microsoft Corp’s Surface.

source: interaksyon.com

Intel inspired by aerospace to make sturdier laptops

SAN FRANCISCO — Engineers at Intel Corp are applying lessons from aircraft design to create sturdier laptops in a bid to reduce the prices of the new ultra-thin computers the top chipmaker is promoting heavily.

Intel is counting on the super-thin laptops, a category it has dubbed ultrabooks, to add some pizzazz to a PC market languishing due to the growing popularity of Apple Inc’s iPad.

Models expected later this year will have large touch screens, “instant on” responsiveness and razor-thin dimensions – all expensive features that have left some on Wall Street wondering if they might be too expensive for average consumers.

Engineers at Intel’s Dupont, Washington R&D center, including former Boeing Co employees, have come up with a design method to make plastic laptop cases as strong as more-expensive metal ones typically used in ultrabooks, said Ben Broili, head of the team.

He said that may cut the cost of future ultrabooks by between $25 and $75 by letting manufactures use plastic cases instead of metal ones without sacrificing quality.

Their work is an example of the steps Intel is taking to find ways to make future ultrabooks more affordable – without cutting the prices of its processors.

At a meeting with analysts last month, Intel Chief Executive Paul Otellini said upcoming ultrabooks would be available for as little as $699, but many are expected to be priced nearer to $1,000 or more.

Borrowing from product design methods used in the aerospace industry, the engineers have found that hard drives, motherboards and other components that make up the guts of a PC can be laid out in ways that make the laptops structure much stronger.

“We didn’t develop a new material. We are able to use an existing plastic with an existing manufacturing technology,” he told Reuters in a telephone interview. “It just requires some more upfront thought initially about how you lay your system out and how you can bring these things together and tie them in.”

Different components in the laptop can be leveraged to support its chassis, or even dissipate heat from the processor, he said.

“There is no one size fits all,” Broili added. “We’re trying to enable the entire industry. You can make trades, move stuff around; and if you don’t want your hard drive here, then move it. You have a menu you can pick from and see what you win or lose from a cost and quality standpoint.”

Typically priced above $200 each, Intel’s processors are the costliest component in laptops. Smaller rival Advanced Micro Devices is selling its new Trinity chips for less in a bid to undercut Intel in thin laptops.

Less flex

Laptops with metal cases tend to be sturdier than laptops with plastic cases, but they cost more.

To get an idea of the structural quality of any laptop, Broili recommends lifting it up by a front corner while it is open and watching how much it flexes.

Intel has already held a seminar in Taiwan to demonstrate its new design technique to PC design engineers and it is promoting it with specific manufacturers.

At the Computex technology show in Taipei, Taiwan, next week, PC manufactures are set to unveil dozens of ultrabooks using Intel’s newest Ivy Bridge processors.

They will also demonstrate future models with touch screens, based on Microsoft Corps’s Windows 8 platform, which is expected out later this year.

Broili said Intel engineers are working on other ways to improve ultrabooks, including tweaks to motherboards, touch screens and Wifi.

Separately, Intel launched a $300 million fund last year to invest in small companies focused on technologies complementing ultrabooks, such as improved battery life.

A few ultrabook models launched this year have been reviewed as nice but pricey, leaving some analysts skeptical the category will attract mainstream shoppers.

Otellini has said Intel is on track to reach its goal that ultrabooks account for 40 percent of all consumer notebooks sold by the end of the year.

Helped by emerging markets, the Ivy Bridge processor and ultrabooks, Intel expects PC shipments this year to grow by a “high-single digits” percentage.

source: interaksyon.com